Agenda – Oxera

The economics of climate change: a signal in the noise?

February 2021

With many countries around the world signing up to targets of net zero carbon emissions, what is the role of economics in the climate change debate? Economics can help to support the pathway to decarbonisation in four key areas, but it is important to communicate economic recommendations effectively to all stakeholders

Investment appraisal in the round: why MCA?

February 2021

Multi-criteria analysis (‘MCA’) is a set of methods, techniques and tools that considers multiple objectives and criteria to support decision-making. It takes a broader perspective than cost–benefit analysis and cost-effectiveness analysis, which stress monetary considerations. MCA is set to play a greater role in investment appraisal as increasing emphasis is placed on having clear strategic links to policies, ‘levelling up’, and stewardship of the environment. Oxera Senior Adviser, Dr Rupert Booth, here considers the motivations for the use of MCA and some of its many techniques

Data-enabled learning: policy implications

February 2021

Despite superficial similarities, data-enabled learning does not necessarily create network effects, and when it does, data network effects are usually weaker and less conducive to lock-in than standard network effects. In this article, Andrei Hagiu, Associate Professor of Information Systems at Boston University, and Julian Wright, Oxera Associate and Professor of Economics at the National University of Singapore, consider how policies that aim to correct market inefficiencies associated with data-enabled learning (such as mandatory data-sharing by incumbents or data privacy restrictions) have unintended consequences that may end up hurting customers overall

Is knowledge power? Data-enabled learning and competitive advantage

January 2021

New technologies make data-enabled learning much more powerful than the customer insights produced by such techniques in the past. They do not, however, guarantee long-lasting barriers that prevent entry by rivals. In this article, Andrei Hagiu, Associate Professor of Information Systems at Boston University, and Julian Wright, Oxera Associate and Professor of Economics at the National University of Singapore, discuss seven factors that determine whether data-enabled learning creates a sustainable competitive advantage

A tale of two cities: the rise and fall of listings

January 2021

The decline in European public equity markets has sparked concern from policymakers about how to revive listings. Behind this overall declining trend, there is a notable variation between financial centres. The contrasting experiences of Sweden and the UK highlight how more flexibility in some aspects of the listing rules and corporate governance might encourage more listings

Crisis cartels: a COVID-19 side effect?

January 2021

Over the years, crises have had a global impact on consumers and companies. The COVID-19 pandemic is no exception, with a number of companies being forced to close their doors for a prolonged period. National governments and competition authorities have shown increased willingness to allow companies to collaborate in order to combat the crisis. But what does economic theory suggest about the current COVID-19 crisis and its effect on the number of active cartels?

Has market fragmentation caused a deterioration in liquidity?

December 2020

The EU equity trading market has seen significant changes in its market structure in the last decade. The introduction of competition among trading venues following MiFID has resulted in lower trading fees and greater choice for end users. However, both buy-side and sell-side participants have raised concerns about trading fragmentation leading to liquidity fragmentation. Has the market indeed become ‘thinner’, and have the actual costs of trading increased as a result?

Preparing for resilience: analysing and treating risk

December 2020

Resilience of infrastructure is moving up the policy agenda, according to a report published this year by the UK’s National Infrastructure Commission (NIC). The NIC considers resilience to be characterised by an ability to ‘Anticipate, Resist, Absorb, Recover, Adapt and Transform’. Dr Rupert Booth, Oxera Economic Adviser, examines the first element—‘Anticipate’. He considers the role of the economist in working with executives on the analysis and treatment of risk as the first step in creating a resilience strategy

Social discount rates: inequality and the long term

December 2020

The second article in this two-part series on Social Discount Rates (SDRs), as used in project and policy appraisal, discusses new evidence on how the rate at which the SDR declines could change, and how it could be adjusted to take inequality into account. Adjusting for inequality can reduce the discount rate even further than highlighted in our first article—to below 2%. The SDR could also decline more slowly than currently assumed. This would increase the benefit–cost ratio (BCR) of almost all projects seeking approval for government funding

Private retreat: are we witnessing the decline of public equity markets?

November 2020

Public equity markets bring substantial benefits. However, in recent years there has been a fall in the number of initial public offerings (IPOs), and an increase in delistings as companies seek to remain or become private. What is driving this decline in listings? Should policymakers be concerned?

Behavioural biases in the judiciary: food for thought?

November 2020

Behavioural economics has taught us that human decision-making is not perfectly ‘rational’; so to what extent can we expect judges to be free from bias? We explore some recent literature on the topic and discuss potential implications. Although—as human beings—we can never be perfectly free from behavioural bias, our judicial processes can adopt measures to bolster fairness and accuracy in the decision-making process

The risks of using algorithms in business: artificial price collusion

November 2020

Increasingly, prices are set by algorithms rather than humans. Many competition authorities have voiced their concerns that this may enable firms (knowingly or otherwise) to avoid competitive pressure and collude. Exactly how would such algorithmic collusion work? And what can businesses and other organisations that use pricing algorithms expect from competition authorities in the future?